Experiencing input latency with LG Ultrafine 21.5 and Macbook Pro

<<It has the physical Thunderbolt icon in it>>

Perfect. That is exactly the right cable to be using. There are lots of other choices that would work badly.

That MacBook Pro should have no trouble keeping up with that displays using that correct cable.

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Your display can only keep up if it is not being bogged down with too much divergent stuff running at the same time or certain hardware issues. To analyze, download and run Etrecheck, a little 'discovery" Utility, change its preferences to "allow full disk access" and run its report. When completed, post the report to a reply on the forums, using the third icon form the right in the reply window, (Tool-Tips shows "additional text" when you hover over it).

Using EtreCheck - Apple Community

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Sometimes if you hold the Option key while viewing Displays preferences pane, additional options appear. Also try holding Option while clicking on the resolutions sub-pane.

Mojave 10.14.6 was released yesterday. (your report says you are running 10.14.4).

Hello,

I suggest that you reach out to LG’s support for further assistance.

Don't ignore the possibility that poorly-optimized software is responsible for you perceived lack of responsiveness.

Some third-party IDE systems are written for maximum portability, and are never optimized for good performance on a Mac (cough cough Eclipse written in Java). Larger screen resolution may make this shortcoming more obvious.

Exactly what model MacBook Pro 15-in by year, early mid late, and processor speed?

What adapters and cables are you using?

You are using "TrueColor" (10 bits/pixel). That is great for editing Videos, a bit of overkill for software development.

I think you are looking through the DisplayPort connection, out to the USB Hub in the display itself. You first reports clearly say it is connected using DisplayPort.

You are not getting the responsiveness you desire because you are running too much background junk. "Junk" in this context is stuff that may be perfectly good, but you don't happen to need at this moment, like stuff in the Attic.

CPU usage did not show up in the report you posted. The Etrecheck developer says that sometimes MacOS system calls simply refuse to produce the information. I expect if you quit Chrome or switched to less resource hungry Browser such as the new version of Firefox or new Safari, that would go a long way.

Activity Monitor (All Processes) CPU tab may show the reasons for the lack of responsiveness.

You have used up all 16GB of RAM in less than a day, and had to simulate an additional nearly 2GB on the Boot drive. That punishes responsiveness.

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Also, your Boot drive is encrypted, but there is no sign of a Backup drive. If your drive died at this moment, how long would it take for you to re-construct your files?. A damaged encrypted drive is generally unsalvageable. Time machine is simple and automatic and runs in the background without punishing responsiveness.